What Lies In Store For The "Cradle That Rocks The World" - A History Lesson In Crisis

Tyler Durden's picture

With the world ever more lethargic daily, as if in silent expectation of something big about to happen (quite visible in daily trading volumes), it is easy to forget that just about a year ago the Mediterranean region was rife with violent revolutions in virtually every country along the North African coast. That these have passed their acute phase does not mean that anything has been resolved. And unfortunately, as BMO's Don Coxe reminds us, it is very likely that the Mediterranean region, flanked on one side by the broke European countries of Greece, Italy, Spain (and implicitly Portugal), and on the other by the unstable powder keg of post-revolutionary Libya and Egypt, will likely become quite active yet again. Only this time, in addition to social and economic upheavals, a religious flavor may also be added to the mix. As Coxe says: "Today, the Mediterranean is two civilizations in simultaneous, rapidly unfolding crises. To date, those crises have been largely unrelated. That may well be about to change." Coxe bases part of his argument on the same Thermidorian reaction which we have warned about since early 2011, namely the power, social and economic vacuum that is unleashed in the aftermath of great social change. But there is much more to his argument, which looks much more intently at the feedback loops formed by the divergent collapsing economies that once were the cradle of civilization, and this time could eventually serve as the opposite. To wit: "The eurocrisis has been front and center for nearly two years, during which time the economic and financial fundamentals have continued to deteriorate. “The Arab Spring” came suddenly, in a series of outbursts of optimism. It may have come at the worst possible time for the beleaguered nations of the North Shore. The Mediterranean has entered one of the stormiest periods in recorded history. It is the major contributor to risk in global equity markets. It is too soon to predict how these crises will end. The Cradle of Civilization is rocking amid an array of winds and storms. “The Arab Spring” ...may have come at the worst possible time for the beleaguered nations of the North Shore."

From Don Coxe

The Mediterranean in History

History buffs would argue that it is impossible to understand the effects on the world from a Mediterranean roiled by crises occurring simultaneously within both the eurozone and the Arab nations today without looking back to the Mediterranean in history.

The "Arab Spring" has focused the world's attention on the South Shore of the Mediterranean. However, most commentators on the successive revolutions supply maps of each of the states, but almost never a map of Mediterranean civilization. This is both non-historical and misleading.

Because none of the city states or countries bordering on the Mediterranean was self-sufficient in everything necessary for a secure and civilized existence—food, wine, weaponry, tools, clothing, papyruses with texts of literature, poetry, military strategy, and agriculture, and the best artefacts for praising the gods—trade was a necessity.

Since ancient times, the states and empires of the Mediterranean region have not just fought and conquered each other—but have traded with, and influenced each other.

The Cradle of Western Civilization—Then and Now

For nearly two millennia, such significance as Greece enjoyed internationally was mostly for its beautiful isles and ruins, and the Romantic dream that the gods, heroes and geniuses embodied in "The Glory That Was Greece" somehow lingered in Olympus, Delphi, and Athens. Recently, it became the source of the Olympic Flame. Even more recently, it became the first of the overindebted underachievers to go broke because of its own profligacy.

In the six centuries before the Christian era, Greece was the leading intellectual and cultural force of the Northern Mediterranean. Alexander the Great spread that influence as far East as the borders of India. His legacy also proved decisive for Egypt.

The Ptolemy dynasty which continued to Egypt after his death until the suicide of Cleopatra, staked its claim to divinity through descent from his mother. In the three centuries of Ptolemaic rule, Alexandria became the intellectual and artistic capital of the Mediterranean and, in its library, the pre-eminent storehouse of Greek culture.

When Julius Caesar's nephew Octavian was given the title of Emperor Augustus, there were three major culture centers—Athens, Alexandria and Rome—of which Rome was the least distinguished. His rule ended the Hellenistic era which had begun with Alexander—the golden age of Grecian cultural dominance of the Mediterranean.

The Romans called the Mediterranean "Mare Nostrum" (Our Sea)—both as an assertion of Rome's ability to project military power across it, and their hope that Poseidon would treat Roman shipping favorably—the Mediterranean being notably storm-tossed, particularly during the winds of winter.

Julius Caesar conquered Britain and Gaul, but could hardly wait to come to Egypt, staying in Alexandria for nearly two years. It was not only the near-divine cultural center of the Mediterranean—but was Rome's biggest grain supplier. Rome hadn't been able to feed its citizens and legions for centuries. It relied on conquests and trade—and trade was usually more reliable.

Rome annexed Egypt when Octavian won the sea battle over Antony and Cleopatra's fleet at Actium in 31 BC. Until then, Rome had to form shifting alliances with the powers in Egypt and the Near East.

Prior to the rise of Islam, the Mediterranean was the center of the known world, and could be described as one huge—albeit diverse—community, which included citizens resident across the region. That was how Saint Paul saw it: when captured, he announced, "Civis Romanus Sum"—gaining the right to trial in Rome. The Catholic Church became the great unifying force across the region when Rome entered decline.

Then Islam swept through the South shore, and West and East shores, being thrown back only after centuries of struggle.

Today, the Mediterranean is two civilizations in simultaneous, rapidly unfolding crises. To date, those crises have been largely unrelated. That may well be about to change.

On the North and West shores, it is a nominally Christian community in which the church is a declining force. On the South and East shores, apart from Israel, it is an Islamic community in which religion is a stronger political and social force than at any time since the Ottoman Empire entered decline.

An equally important divide is demography. Europe is in the middle stages of demographic collapse on the Japanese model, with a fertility rate of approximately 1.3 babies per female—far below the replacement rate of 2.1—each new generation is roughly 60% of its predecessor, making the third generation roughly 40% the size of the first. That loss of the basic dynamism of human progress is an insuperable force for declining economic activity: GDP is output per worker multiplied by the number of workers. During and after the Baby Boom years, this meant annual growth in the number of potential workers and first-time home buyers. Today, that shrinking and aging population is a downward drag on real estate prices and employment opportunities, since home building and servicing are such huge job contributors.

For many years, tourism was the most reliable source of income of Mediterranean PIIGS as their economies became less competitive, but the demographic decline among the Northern European nations and the strong euro have proved painful for hotels, tour operators, sailboat charterers and restaurants. La dolce vita rests on reliable cash flows.

The third major divide within the Mediterranean region is education. On the North shore, literacy is near-universal and higher education trains millions of young people for the jobs global economic growth offers. That so many millions of them are unemployed is due to slow economic growth, guild and union laws, and other over-regulation that stultifies competition and progress.

In the South, education is a double-edged scimitar. Illiteracy is widespread, which means a huge percentage of the population is destitute or on the edge of economic disaster—like the poor Tunisian street vendor whose self immolation launched the most dramatic geopolitical developments in the Mediterranean since a Serbian anarchist killed Austria's Grand-Duke.

However, most of the Arab revolutions were launched by educated young people who could not find worthwhile employment in their largely dysfunctional economies. Cell phones and computers are ubiquitous, but there are few new manufacturing and service industries emerging. Young people envy the fast-developing prosperity of their generation across so many emerging economies, and blame their sclerotic regimes for their lack of opportunities.

Paradoxically, the biggest political winners from the sacrifices of the local youthful educated elites are the parties with no coherent economic growth agenda, just the mantra that "Islam is the answer." These parties were minor contributors to the miracles of Tahrir Square and its neighboring countries. But the dedication and organization of the Islamist parties, including the 8th Century purist version called Salafists, has meant that the divisions among the varying liberal or moderate factions have given power to them in Egypt.

In the Egyptian elections, the Islamists won 72% of the votes, with the Muslim Brotherhood receiving 47% and the Salafists 25%. Although the Brotherhood insists it is pluralist and tolerant, its highest-profile liberals who were so visible in its rise to power are now, according to numerous press reports, losing ground to hard-liners.

As we wrote in Basic Points while enthusiasm for the Arab Spring was running high across the world, the record for autocratic regimes toppled by idealistic liberals includes all too many tragedies. Examples: the Girondistes and their liberal allies in France lost power—and, in many cases, their heads, to the Jacobins, who were succeeded by Napoleon, who became Emperor; the Mensheviks and other liberals in Russia who seized power from the tsars in February 1917 were deposed in October by Lenin and his Bolsheviks, and were systematically annihilated thereafter.

Among the most conspicuous Egyptian victims of the Fall of Mubarak are the Coptic Christians (nearly 10% of the population), who were well-established in Egypt centuries before Islam was born, and who form a disproportionately large percentage of the educated and business-oriented citizenry. Their churches have been burnt—sometimes with worshippers inside. They have been brutalized by mobs while soldiers watched placidly. The brazen attack on the Israeli embassy in Cairo also appeared to have been organized with support from elements in the army: soldiers stood by until the mob had broken through all the external barriers.

Predictable effect: tourism, Egypt's biggest foreign-currency earner, is collapsing. Foreign direct investment—heavily tourist-oriented—is on hold. Despite its massive problems, Egypt had been making modest economic progress until the army arrested Mubarak and embarked on an erratic program of crisis management, which has triggered double-digit inflation and a sharp fall in the nation’s modest forex reserves. Its decision to reject an IMF loan in June, because the terms were “insulting” has forced the interim government to borrow locally, thereby draining liquidity from the economy. The new Muslim Brotherhood government talks of modernizing the economy, but long-range planning and investment cannot be implemented in a crisis. The Salafists were elected by the poorest of the poor, and they are adamant that the food and energy subsidies that are draining the treasury must continue.

Remarkably, the other big divide between North and South is faith in democracy.

The unifying cry across the South Shore has been the demand for democracy, for which thousands of mostly young and mostly liberal people suffered imprisonment, torture or death.

Such idealism is at bay on the North Shore: the two cradle nations of Mediterranean democracy—Greece and Italy—which were democratic while Spain and Portugal were still dictatorships, have been forced by the eurocrisis to forsake rule by elections. They have fired their top political leaders in favor of elite Eurocrat replacements acceptable to the European Central Bank and Brussels.

Even when Alexander the Great was conquering the eastern Mediterranean and Southern Asia, the lives and fortunes of most people on earth were unaffected.

Not today. The so-called "Cradle of Western Civilization" is rocking amid strong winds from both sides of the sea; if it falls, the economic and geopolitical effects will be enormous.

Conclusion

The eurozone's problems and the Arab Spring have, to date, been discussed in the media as discrete occurrences.

However, for the first time since the Second World War, most of the nations in the region face crises simultaneously, which suggests huge potential instability.

The key reason Italy broke its long, lucrative Libyan relationship, and enthusiastically supported the NATO attacks was the flood of Libyan refugees pouring into Italy. Libya's cash flow problems could be temporary, because its substantial production of light crude oil should shortly resume, but in its attempts at nation-building it faces the same internal conflicts between liberals and Islamists as Egypt. Already, pro-Gadhafi supporters have taken over one town and proclaimed a rebellion.

Sadly, it is almost inevitable that the North Shore will soon face serious refugee problems as the non-oil South Shore nations are torn with internal divisions the dictators had suppressed, and their fragile, uncompetitive economies implode. Iran managed to survive as a brutal Shia theocracy because it inherited a society of well-educated men and women—with a strong agricultural and trading base in which entrepreneurialism flourished—and because of its immense reserves of oil and gas. (Fortunately, Iran is unlikely to be a major meddler in the Mediterranean crises, because the populations are largely Sunni.)

Beleaguered governments frequently resort to distracting their citizenry by blaming foreign enemies. Israel has been blamed for nearly all Mideast problems for decades—by Arab propagandists and by the global Left. It has peace treaties with two neighbors—Jordan and Egypt. The Egyptian Army rulers were careful not to suggest that the Israel treaty should be torn up, as some of the candidates for office were demanding, partly because of American aid. However, it was to be “reviewed”. We saw Jordan’s King Abdullah being interviewed on US TV and he expressed concern about demands from radicals to revoke the Israel treaty, but said that it was crucial that Israel re-start its negotiations with the Palestinians, because the one issue uniting “all Arabs” was insistence on settling that question for once and for all.

Good luck with that.

The eurocrisis has been front and center for nearly two years, during which time the economic and financial fundamentals have continued to deteriorate. “The Arab Spring” came suddenly, in a series of outbursts of optimism. It may have come at the worst possible time for the beleaguered nations of the North Shore.

The Mediterranean has entered one of the stormiest periods in recorded history. It is the major contributor to risk in global equity markets. It is too soon to predict how these crises will end.

The Cradle of Civilization is rocking amid an array of winds and storms.

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markmotive's picture

Well said. Societal breakdown throughout the middle east is only leading to greater volatility and uncertainty. Has a revolution ever resulted in more stability? Meanwhile the US is adding to its Persian Gulf military presence.

Beware of these developments, because war with Iran means WWIII

http://www.planbeconomics.com/2012/02/01/%e2%80%98war-in-iran-would-mean-wwiii%e2%80%99/

 

Gubbmint Cheese's picture

I find it interesting that Coxe got a bit more bullish on stocks in this report...

CPL's picture

If thinking on energy futures, sure, but if your stock is worth 3000 a share because easy energy is unavailable at any price because the world at that point has gone full mad max.

 

That's sort of what's happening now with people pushing a FIAT print button on a daily basis.

Spirit Of Truth's picture

Printing money to inflate mass optimism is all about the audacity of false hope and faith in "Mammon" as your god.

The truth is that the whole scenario foretold in Biblical prophecy is unfolding before the world's eyes, Armageddon is at hand, and Wall Streeters will undoubtedly be the last to "get it".

http://thespiritoftruth.blogspot.com/2012/02/is-armageddon-at-hand.html

http://www.zerohedge.com/comment/reply/443414/2120693

john39's picture

oh they get it alright...  but they are on the "wrong" side of it.   they have their own outcome in mind.

Spirit Of Truth's picture

“How can this be?” Nicodemus asked. [John 3:9] :)

Spirit Of Truth's picture

“How can this be?” Nicodemus asked. [John 3:9] :)

Xkwisetly Paneful's picture

Hoping I can get to an Egyptian soccer game one of these days.

and of course the billionaire tyrantsters would have all fallen without the evil zionistas taking out Hussein just ask one of them.

 

aslam alekem brothers.

Xkwisetly Paneful's picture

Their own outcome in mind? But the evil zionistas are the greatest threat in the middle not these alternative outcomes.

Make up your mind Achmed. Either continue portraying the moderate radical islamic muzzies as victims or as the perpetrators of their own outcome in mind.

piceridu's picture

down arrow for mentioning the bible in financial discussions...should I mention a quote from The Iliad?

Spirit Of Truth's picture

Sure.

I imagine people will "get it" after the "fact": http://spiritoftruth.org/Thesis/Intro/#4d

C'est la vie

 

brettd's picture

No down arrow!

Bible is full of economic lessons, many of them counter-intuitive to the point of radical.

GenX Investor's picture

This just in from CNBC, we go live to Bob Pisani on the floor of the NYSE, "traders on the floor are saying this is a very bull shit (er...bullish) sign and we are expecting a concerted melt up in the market!!!!  Back to you Trish!

I am more equal than others's picture

Alex, I'll take Stable Nations for $1,000

America and France

 

What countries became more stable after their revolutions?

 

You are correct!

 

 

non_anon's picture

in my study of history, the most inconsequential actions can have big percussions

DoChenRollingBearing's picture

I recently finished reading The Great Sea (David Abulafia), a new book on the Mediterranean, its human history for the last 20,000 years.  It's very good.

brettd's picture

Yes...And the headlines of greatness, devolve into tragedy:

French Revolution.

Russion Revolution.

Chinese Cultural Revolution.

All started with a bang and then devolved.

 

unrulian's picture

...much like my marriage

Socratic Dog's picture

Hmm.  Mine too.  Every marriage?

El Viejo's picture

Revived Roman Empire??

TorchFire's picture

Yeah...a Neo "Roman" Empire With Goldman Sachs appointed leadership in every "country".

BLOTTO's picture

Yes, new Holy Roman Empire... Lead by Germany and its German Pope.

Some EU member nations will get kicked out and be replaced with others. Like perhaps England, fully.

Thats why the EU wont/cant fail.

john39's picture

some of the fighting is still raging, but MSM does not permit you to see it.  Bahrain for example.  Bloodshed there today by the U.S. government ally, but not a word on CNN, in marked contrast with Syria, where NWO proxies are wreaking havoc while Hillary Clinton blames Assad.  what a shock.

CPL's picture

I don't know if the author is missing information, but talking to folks in Egypt on g+ there is some heavy shit going on right now has been for months.

Schmuck Raker's picture

-1 You lost me at -

".......Syria, where NWO proxies are wreaking havoc......."

Perhaps a link?

NotApplicable's picture

Google "Ambassador Ford." He's back home now, but did nothing but stir shit up while in Syria.

john39's picture

the MO seems self apparent at this point.  that anyone needs someone to hand them a link to the obvious truth is the surprise.

Schmuck Raker's picture

So you are unwilling, or unable to offer any support for your assertion that 'The Grand Conspiracy Constantly Referred To As The New World Order Because It Sounds Menacing' is the real culprit behind the havoc wrought on the people of Syria, and Mr. Assad is a saintly victim of same. Do I understand you correctly?

Do you prefer to act dismissively and express disdain whenever someone questions your statements?

john39's picture

not for you, but for anyone who might actually care:

http://youtu.be/5L49L6iZSSg

Schmuck Raker's picture

Interesting video. Was that so hard?

Schmuck Raker's picture

While I agree that in general the US MSM is worthless...

 

1. When it comes to Syria, RT is probably no more reliable a source than Fox News.

2. Webster Tarpley, whom RT interviewed, is not someone I was familiar with so I took NotApplicable's advice(sort of) and Googled him:

A) Wiki - first sentence:

Webster Griffin Tarpley (born 1946) is an American conspiracy theorist...

*strike one*

B) Tarpley.net - Biography - first sentence:

Webster Griffin Tarpley – one of the most incisive critics of Anglo-American hegemony. As an activist historian he is best known for his book – George Bush: The Unauthorized Biography (1992), a masterpiece of research which is still a must read.

*strike two(anyone that self-promotional)*

C) Webstertarpley.blogspot.com - I'm not even sure Mr. Tarpley runs, or is in any way associated with this site. I hope not.

Tarpley Tracker blog with other interesting picks..

The first post you see(a video):

Daniel & The Lion's Den - J Kleck

subtitled: Alien Disclosure and Recap

http://youtu.be/eKLWs3tnE48

*strike three(hey, you're judged by the company you keep)*

 

I'm no investigative reporter so I just picked out three of the first seven links Google gave me.

I am not impressed: a suspect media, a questionable source, a tin-foil peer.

I believe that there IS a popular movement to remove Assad. Outside forces surely helped spark the rebellion, as ever throughout history.

But, the basic dynamic at play here is minority rule by Shiites over a Sunni majority, and all the attendant injustices, etc.

 

I could be swayed by better evidence to the contrary.

However, I don't think YOU can provide it.

[edit: Maybe I'll ask my Lebanese neighbor what he thinks is really going on in Syria]

john39's picture

Do your own homework dumbass.

Xkwisetly Paneful's picture

Yea come on dumbass. Subscribe to a bunch of fringe deluded mentally deranged whackos that share the same delusions you do consider their output fact despite it being overwhelmingly wrong, then post said links 1000times and hope other mentally deranged whackos adopt same nonsense as gospel.

 

shokdee's picture

Webster Tarpley is an excellent researcher and we owe him a big hug for his outstanding research into the Venetian-Dutch-Anglo system and exposing the key role of Paolo Sarpi in creating Galileo, Descartes and Bacon (and by extension all Empiricism and the Scientific Method). Sarpi and his team introduced Rosicrucianism and Freemasonry to the world and created occult Cabalism, which masquerades as modern Science. "Shakespeare" is part of this grand scheme too.

==== ESSENTIAL READING FOR EVERYONE

Against oligarchy (free book) : http://tarpley.net/online-books/against-oligarchy/

The modern Anglo-Dutch Empire by Robert Ingraham (free book) : http://www.oaklandasp.comcastbiz.net/

=====

If you want more information or to discuss this please contact me at my username at gmail, thanks.

 

JOYFUL's picture

Sure, ask for supporting evidence, then work yurself into a sweat to dismiss it! Gosh, it doesn't get much better than this!

Somebody in the peanut gallery calls Webster Tarpley a conspiracy theorist, bingo, he's down on the mat...then he's a 'self promoter' = somebody not on the NSC\CIA\FBI\DHS payroll and therefore left to fend for his own daily bread.  Criminal...just like that muckraker Reggie Middleton! Who cares if he's right, he ruffles the feathers that built my nest...jail em all!!!

Number three on yur list is the best of all!!!!  Guilt by association.....AIPAC organizers and free speech censors like Abe Foxman are known associates of rabbinical organ transplant mafiosos and sex trade kidnappers, who of course contribute heavily to the cause that shields them from scrutiny so well: but hey, that's different, cause they're doin GOD'S WORK! You're not impressed!?!??!? Aw schucks, Schmucks, we all depressed now!!

btw...you believe that there is a popular movement to remove Assad!?! Good on ya! Why don't you put your money where your mouth is, and send a contribution to it's sponors:

Middle East Policy Council
1730 M Street NW, Suite 512
Washington, DC 20036

proudly supported by Chevron, Exxon, munitions manufacturer Raytheon (Tomahawk cruise missile), and Boeing....

 

Schmuck Raker's picture

"Sure, ask for supporting evidence, then work yurself into a sweat to dismiss it! Gosh, it doesn't get much better than this!

Somebody in the peanut gallery calls Webster Tarpley a conspiracy theorist, bingo, he's down on the mat...then he's a 'self promoter' = somebody not on the NSC\CIA\FBI\DHS payroll and therefore left to fend for his own daily bread. "

Now, that right there is some very reasonable criticism, and justified.

This too...

"Number three on yur list is the best of all!!!!  Guilt by association....."

I must say, I included #3 because it made me laugh, more than it made any valid point.

Caviar Emptor's picture

There's been media blackout concerning most of the Persian Gulf and the Med region as far as violence. While hundreds were dying weekly in Syria for the past 6 months it was barely covered. Saudi violence was muzzled. And as you say Bahrain. Even UAE and Qatar were not immune. 

The downside to the non-coverage is a complacent blind-spot. And it;s a sure sign that US democracy, as we knew it, is dying and being replaced gradually with authoritarian government. Freedom is a fragile flower, as we're all about to learn. 

unrulian's picture

in my portfolio i'm playing;  gold, lead and tin....."jimmy, am i diversified?"

Money 4 Nothing's picture

Aaaare you ready SKiiiiDaddy!

 

May I suggest some Tech stock?  And, there is a wonderful opportunity with a new IPO called Facebook.. Perhaps you've heard about it?

 '

Jim Cramer..

battle axe's picture

IRAN here we come, time to blow more money that we do not have......

DaveyJones's picture

time to blow money, laws, lives, loves, and IVs

GMadScientist's picture

Why not?

We burn gas we do not have, offshore jobs we do not have, get groped for freedoms we do not have, torture while touting principles we do not have, and romanticize a history we did not have.

MrBoompi's picture

According to the thinking of the establishment, you are better off being in our central bank system and being awash in debt, as opposed to being outside of this system and fluch with cash and natural resources.

Debt is the new way to control others.

Tyranny is Love's picture

Debt is the new way to control others.:

 

Debt is a very old way to control others. This current version just gone digital.

seanring's picture

I know this may sound loopy, but I think the "singularity" is money printing.  If the money printing ends, there are no wars that can be financed, no swap lines to the ECB to hold up a broken currency union, and no huge run up in commodities prices - especially in staple foods like grain.  This is where much of the Arab Spring came from.  While I think what the author writes has value, if the central banks didn't blow out the money supply to finance malinvestment (including funding dictatorships like Egypt's), none of this could have happened.  We need to take back the power for the "intelligentsia" and give it back to the people in the form of sound money, low taxes, and the ability to be entrepreneurs without government inference.  And no more damn wars in the Middle East.  Is that too tall an order?  Maybe I'm aiming high...

http://SeanRing.com

Manthong's picture

yes, you are high..

Can I have a hit of that stuff?

Money 4 Nothing's picture

In one word.. Gold.

Loopy you be.

seanring's picture

*sorry, "from" the intelligentsia...

Tyranny is Love's picture

If the money printing ends, there are no wars that can be financed

+10

You cant have a war without BOTH sides being able to finance it. Even a small non conventional war requires funds.

If one side loses its source of financing (and cant replace it) then the war ends.